Both the Democrats and the Republicans Know Better
BOTTOM LINE
Politicians are motivated by how their voters perceive them. It matters that their public statements reinforce their closely cultivated political image. Deviation from that posture is seen as “selling out”, “flip flopping”, or capitulating, which can be political suicide and fund-raising poison. Compromise used to be a valued asset; now it is a mark of weakness. Creating false narratives about cutting safety-net programs does not advance critical legislation, but it satisfies the oratorical requirements for reelection.
Just like an ice skater, no matter how hard you spin, you still wind up in the same place.
There is a lot of rhetoric surrounding the “cuts to Medicaid” within the “Big Beautiful Bill Act”. But, at least in my opinion, BOTH sides are just posturing, but for different reasons. I lay out the paradox of the political oratory here. Republicans claim cuts that can’t be made, and Democrats use those illusory cuts to claim cruelty on the part of their opponents.
Here are the facts.
The CBO estimates that 13.7 million people will lose Medicaid coverage over the next 10 years, but that estimate is based on multiple factors including financial, state actions, and complications due to dual eligibility. I will focus on the two more publicized sections of “cuts”, the ones most subject to these issues of political posturing.
First is the removal of illegal immigrants from the Medicaid rolls.
Second is the requirement that “able-bodied” males prove that they are working at least 80 hours per month. On the surface, both seem patently obvious. That’s the problem.
Let’s take a look at those two groups.
ILLEGAL IMMIGRANTS RECEIVING MEDICAID
Illegal immigrants or undocumented workers are NOT eligible for Medicaid. The 1996 law, the Personal Responsibility and Work Opportunity Act, prohibits anyone without permanent status from access to most federal benefits, including federal health care programs and assistance including Medicaid and CHIP (the Children’s Health Insurance Program). But you may say, do the illegal aliens avoid the law and fraudulently get Medicaid anyway?
Medicaid applications are filed with individual states and that process generally requires sufficient documentation that undocumented individuals, or illegal aliens are effectively screened out of eligibility. Most importantly, there is no evidence that there are any significant numbers of illegal immigrants receiving Medicaid.
Some legal immigrants ARE currently eligible for Medicaid. These groups include green card holders, refugees, those granted asylum, those granted withholding from deportation, members of recognized American or Canadian Indian tribes, or citizens of the Marshall Islands, Micronesia, and Palau who are living in the US (COFA migrants). None of these groups falls within the current definitions of “illegal immigrants”. They are, in fact, legal residents.
There are some programs available that DO provide Medicaid coverage for illegal immigrants, but these are provided and funded specifically by individual states and are not subject to Federal legislation, and thus, do not fall within the “cuts” within the BBB Act.
So, what does this mean?
For the Republicans, it allows them to make a political debating point by shouting that “millions” of illegal immigrants will be thrown off Medicaid; but, more importantly, the claim, by itself, allows Republicans to register significant “savings” in the BBB Act, and that is critical because there MUST be “savings” in order to meet the financial requirements of their bill.
For the Democrats, it allows them to make a political debating point by shouting about the callousness of their opponents and claiming Draconian cuts to necessary spending.
However…since there are virtually no illegal immigrants on Medicaid, the assumed cuts that the Republicans are claiming and with which the Democrats are so upset, are effectively zero. You cannot save money by cutting something that is not there, and you cannot complain about funds being cut, when there are no funds being cut.
It reminds me of the story about the woman in the butcher shop who asks for the price of veal chops. When the butcher tells her it is $15 per pound, she says that the butcher across the street only charges $10 per pound. The butcher suggests she go buy her veal chops there, but she replies that he is out of them. The butcher then responds that his veal chops are $10 per pound when he is out of them also.
I believe that both parties clearly understand the Kabuki theatre that they are participating in. For the Democrats, although they understand that there will be no “savings” for “cutting out” nonexistent illegal immigrants from Medicaid, they still roar about those “cuts” to Medicaid. If there are no people to cut, then there will be no money actually cut.
For the Republicans, although they understand that there are no illegal immigrants to cut, they need to use those false savings to balance their finances.
ABLE-BODIED MALES NEED TO WORK
This is clearly a wonderful bumper sticker. No one can possibly support young men sitting at home, munching potato chips and playing video games, receiving Medicaid.
Again, Republicans NEED to maximize their estimates of this group in order to provide the “spending cuts” that they need. And Democrats are thrilled to accept those numbers because they can scream about those callous spending cuts.
But…how many people are we really talking about?
There are currently about 73 million Americans on Medicaid. How many are “stealing” Medicaid? The Republicans like to use a figure of 13.9 million Able-bodied Adults Without Dependents (ABAWD). However, this number is dramatically inflated. The number comes from the most recent Census data, the 2022 Annual Social and Economic Supplement of the Current Population Survey, which uses the Survey of Income and Program Participation (SIPP).
From this data we learn that of those 13.9 million ABAWD’s, 9.6 million actually had documented work of at least 80 hours per month. So, the actual number of ABAWD’s outside the requirements of the BBB Act, is around 4.3 million.
The data from SIPP actually reduces this number further. There are people classified as ABAWD’s who should actually be eligible for Medicaid because they suffer from disabilities. Unfortunately, not everyone who is disabled currently receives benefits. Some have short-term disabilities, others are in the process of disability determination, a process that can take years to complete, and some have been swallowed by the bureaucracy/paperwork monster that hampers receiving those benefits and often results in people who are actually qualified, just giving up their attempts to register. Best estimates reduce the 4.3 million to about 3.5 million.
However, there is a large fraction of that 3.5 million that DO work but cannot document their hours because they are working in the “barter economy”. This underground economy is estimated to account for between 6.4% and 12% of the US GDP. A lot of these people provide services for the affluent beneficiaries of the proposed tax cuts. For example, the private service people who clean your house, your pool, or tend your garden and who you pay in cash. Or the people who wash your car at the Tennis Club, or park your car, and receive off-books payments. There are millions of people in this country who work in cash-paid jobs like child sitting, home aid, small restaurants, or are dayworkers in construction. Paid in cash, with no filed documents, these people cannot document their hours.
The fact that the supporters of the BBB Act focus on young males, ignores single women, although the statistics include them and the law would most likely not discriminate. It is just politically more difficult to lecture about how we want to throw young, single women off of Medicaid.
The bottom line here, is that there are actually very few people who fall in this group also. The Republicans have seen the same data, and they understand this, but the bumper sticker is a great debating point, and they need to program spending cuts, so they lie. The Democrats also have seen the same data, and they understand this, but they need to campaign about the cuts, so they also lie.
WHAT OTHER CUTS WOULD ACTUALLY CHANGE MEDICAID?
In my opinion, a far more important change codified in the BBB Act would cut the federal matching rate for those enrolled in the Affordable Care Act (ACA, or Obamacare) expansion from 90% to 80%. This change is particularly devious. When passed, the ACA expansion ensured that the Federal Government would pick up 90% of the costs. I remember the debates at the time; many states simply did not believe that the federal government would actually live up to that promise, and that the costs would actually fall back on the states. Many states never instituted the Medicaid expansion because of this fear, and in 7 of the 33 states that expanded Medicaid under that expansion, they enacted “trigger” laws that automatically terminate Medicaid expansion if the federal matching rate is decreased. Two other states require a new review process to evaluate whether to continue the Medicaid coverages. Pushing financial coverage to the states, in which a balanced budget is mandated, shifts tax burdens to the state residents, or forces the states to increase local taxes or decrease coverage. State taxes are less progressive than federal taxes, so, the net effect for the middle class is more taxes not less.
HOW WOULD CUTS AFFECT OUR HEALTHCARE SYSTEM?
Any actual reduction in Medicaid coverage due to the policies of the BBB Act will place existential stress on the rural healthcare system in this country.
In 1986 Congress passed the Emergency Medical Treatment and Labor Act, which mandates that hospitals that participate in Medicare provide emergency medical services to anyone, regardless of their insurance status or ability to pay. This law requires that anyone who presents with a health problem MUST be treated by the hospital. And the small rural hospitals are most vulnerable. (A higher percentage of the population in rural areas receives Medicaid when compared to urban areas, so any reduction in Medicaid is amplified in rural areas). If the patient is an undocumented worker or has no insurance, the hospital absorbs the costs. Without Medicaid funding, this places the financial burden on that small rural hospital. And as most rural hospitals are operating at a deficit already, the increased pressure of providing free services, mandated by law, risks putting those hospitals out of business. Rural communities losing their local or regional medical centers places new stress on the citizens in these communities who may need to drive over 2 hours to reach a hospital after a traffic accident or fire, or to deal with a broken arm, pregnancy, birth/labor, overdoses, or severe illness.
Over the past decade almost 150 rural hospitals have closed, and of the 2,100 remaining, at least 700 are on the verge of failure now, before the BBB Act passes.
Political posturing on both sides of the aisle does not benefit the American people.